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Terra Crash: According to Chainalysis, two traders caused the crash

 


Two traders may be behind the collapse of the Terra ecosystem. $200 million in transactions were enough to bring about the collapse of an entire ecosystem. The stablecoin UST was first manipulated on the night of May 7th on Curve 's 3pool liquidity pool .


Analysts found out who could possibly be behind the collapse of the Terra ecosystem. The crash cost the entire crypto industry around $60 billion. Analysts at Chainalysis revealed in a report that the collapse of the stablecoin TerraUSD (UST) and the entire Terra ecosystem was triggered by just two traders.


The Terra Crash takes its course

According to experts, the meltdown began on the night of May 7, when Terraform Labs withdrew 150 million UST from Curve's liquidity pool 3pool as part of a proposed transaction. According to the analysts, this one-time large transaction increased the volatility of the pool.


An image of Chainalysis

Just 13 minutes later, a trader spotted the loophole and exchanged 85 million UST for USDC. Through the transaction, the trader wanted to further increase the volatility of the liquidity pool. In the following hours, another trader converted a total of 100 million UST into USDC in four staggered trades, also increasing volatility.


In response to these transactions, Terraform Labs withdrew an additional 100 million UST from the 3pool. This withdrawal was intended to “even out” UST's share relative to other stablecoins. At this point, however, the UST had already lost the dollar peg due to previous large transactions and several smaller transactions.


Between May 7th and May 9th, three unknown UST holders exchanged $480 million worth of Tether (USDT) for UST to save the project and stabilize the 3pool. Also on May 9, the Luna Foundation Guard (LFG) converted billions of dollars worth of Bitcoin into UST. However, the reserves were already used up on May 10th and the UST price continued to collapse.


The UST rate on the UST/USD pair fell from $1 to $0.12 in early May. The Terra ecosystem's native token LUNA was also affected and the LUNA/USD pair lost 100% in value.


Disclaimer

All information contained on our website has been researched to the best of our knowledge and belief. The journalistic contributions are for general information purposes only. Any action that the reader takes based on the information found on our website is entirely at their own risk.

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